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Pricing Information of Medical Devices Marketed in India to be Submitted to National Pharmaceutical Pricing Authority (NPPA) by March 10, 2021

India’s medical device price regulator has issued a direction to importers and manufacturers of 24 categories of medical device to submit price-related information, including the price at which they sell medical devices to distributors and hospitals in India, by March 10, 2021.

Background

In India, medical devices are regulated not just for quality, but also for price. The Drug (Price Control) Order 2013 (“DPCO”) regulates prices of all medical devices that are marketed in India. Some medical devices such as coronary stents, drug eluting stents, condoms and intra-uterine devices that are listed in the schedule of DPCO have their ceiling price fixed by the National Pharmaceutical Pricing Authority (“NPPA”), while all other medical devices (i.e. the non-scheduled medical devices) have to abide by a restriction whereby their maximum retail price cannot increase by more than 10 per cent in any given 12-month period.

Direction

In order to ensure that medical device manufacturers and importers are complying with the requirements of DPCO, the NPPA has been given powers under DPCO to issue directions to manufacturers and importers to submit price related information. It is in furtherance of this power that NPPA has directed that the following information be submitted to it:

  • Medical device category as per risk classification published by DCGI
  • Product name or specifications
  • Brand name or description
  • Date of launch in India
  • Minimal unit of sale/retail pack size
  • Price per unit to distributor / stockist
  • Price per unit to hospital
  • Price per unit to retailer
  • Applicable GST percentage
  • Moving Annual Turnover
  • Maximum retail price for unit as on January 1 of the years 2018, 2019, 2020 and 2021 (for a few categories, only the MRP as on January 1, 2021 needs to be submitted)

A copy of the said direction is available at this link.

24 Categories of Medical Devices covered by the Direction

Disposable Hypodermic SyringesDisposable Hypodermic NeedlesDisposable Perfusion SetsIVD devices of HIV, HBsAg and HCV
CathetersIntra Ocular LensesI.V. Cannulae       Bone Cements     
Heart ValvesScalp Vein SetOrthopedic ImplantsInternal Prosthetic Replacements      
Ablation DevicesOrgan Preservative SolutionBlood Grouping SeraLigatures, Sutures and Staplers
Tubal RingsSurgical DressingsUmbilical tapes     Blood/Blood Component Bags
NebulizerBlood Pressure Monitoring DeviceDigital ThermometerGlucometer

Challenges with submitting price for retailer

There may be certain fields for which information has been requested by NPPA, but the information may not be available with the importers or manufacturers. For example, the details of price to retailer sought by NPPA may not be available since importers and manufactures typically sell to a distributor or hospital, and not directly to a retailer. In such cases where the information is not available due to the nature of the manufacturer’s or importer’s business model, the importer or manufacturer may simply submit to NPPA that the information is not available with them. The importer or manufacturer is not expected to retrieve this information from its supply chain and submit to NPPA. Being in possession of such information may in fact result in breach of anti-trust laws, as an attempt to undertake resale price maintenance.

Sale of imported medical devices marketed by marketer

Some importers import and sell directly to a marketer in India. In that case, it is the marketer who is supposed to provide this information as price related information is not available with the importer. However, the importer should ideally endorse and countersign the information submitted by marketer because the primary obligation to submit this information is with the importer. Alternatively, the importer may submit whatever information that it has and give a written undertaking along with the submission that the remainder of the information will be submitted by the marketer because the remaining information is unavailable with the importer.

Requirement of license

The direction also contains a note which states that manufacturers and importers must attach a copy of the licence obtained from the DCGI for each medical device. It may be difficult to furnish the manufacturing licence for Class A and Class B medical devices (such as Glucometer). The said licence is actually issued by State Licencing Authority of the state where the medical device is manufactured. In order to comply with the requirement of the direction, a copy of the licence issued by State Licencing Authority should be annexed in place of copy of license from DCGI.  

Format for submission

All the above information has to be certified by a qualified chartered accountant or cost accountant in a physical format, and the same information is also required to be sent in form of an Excel Sheet to the NPPA at the following email ID medicaldevices-nppa@gov.in

What should manufacturers and importers of medical device take this direction very seriously?

Any non-compliance with the direction of NPPA to submit price information may result in criminal prosecution under provisions of Essential Commodities Act of 1955.

The information will also be used to ascertain whether any manufacturer, importer or marketer has fixed the MRP of the medical device in excess of ceiling price or has increased the MRP over the permissible 10 per cent limit in a 12-month period. In both these cases, the NPPA has the power to recover the excess price paid by the end-consumer from the importer or manufacturer, and to levy a penalty for overcharging in certain cases.

That apart, the information will most likely be used by NPPA to track  or validate the market share of various medical devices and medical device manufacturers in terms of moving annual turnover (MAT) of said medical device under the submitted medical device category. If, at any time in future, a medical device is inserted in the schedule of DPCO on the grounds of essentiality to the Indian population, then the market share in terms of MAT will become an important consideration before NPPA in fixing the ceiling price that medical device.

Therefore, manufacturers and importers of the 24 categories of medical devices listed above must take this exercise seriously and submit the requisite data to the NPPA in prescribed form within timelines, both in physical and electronic format.

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Legal Considerations for Awareness Campaigns on Persons with Disabilities in India

Legal Considerations for Awareness Compaigns on Persons with Disabilities in India

Across the world, December 3 is observed as the International Day of Disabled Persons. The United Nations has designated it as a day that “aims to promote the rights and well-being of persons with disabilities in all spheres of society and development, and to increase awareness of the situation of persons with disabilities in every aspect of political, social, economic and cultural life.”  The United Nations Convention on the Rights of Persons with Disabilities (CRPD), which was signed and ratified by India, charts out a tangible path for realising this goal.

India enacted the Rights of Persons with Disabilities Act in the year 2016 pursuant to its obligations under the CRPD. The Act defines person with disability as “a person with long term physical, mental, intellectual or sensory impairment which, in interaction with barriers, hinders his full and effective participation in society equally with others” and specifies a total of 21 physical, intellectual and mental disabilities as well as disabilities due to chronic neurological conditions and blood disorders.

Amongst other things, the law calls for greater public awareness in a bid to break the stigma, discrimination and ostracization faced by people with disabilities. In recent years, there has been a spurt in campaigns – largely digital – aimed at a establishing a more inclusive society. While these should, without a doubt, be encouraged, there are certain legal considerations that should be kept in mind.

Web Accessibility

While this requirement is not yet embedded in the law, it seems counterintuitive to have campaigns that the primary beneficiaries do not have access to. Nonetheless, web accessibility is still in its formative stages in India. The Rights of Persons with Disabilities Rules, 2017 requires that every establishment (government and private) maintains a website that is accessible to the disabled. This mandate was scheduled to come into effect on June 15, 2019, but as of date, the Government has only released the standards for government websites, and it yet to notify the standards applicable to private entities’ websites. In addition to complying with the standards, the documents on the website must be in a text-to-speech compatible Electronic Publisher or Optical Character Reader based PDF format.

As a matter of good practice, businesses should move towards accessible websites. There are plenty of resources online, most notably the Web Content Accessibility Guidelines. If not entirely, businesses may choose to incorporate at least a few of the tools and tactics to make their websites more accessible.

It should also be noted that all organisations are required to have an Equal Opportunity Policy, which outlines the measures that the organisation has taken to implement the provisions under this law. It should, inter alia, contain a statement verifying that it has the requisite barrier-free accessibility, facilities, amenities and assistive devices that are required for a person with disability to be able to discharge their duties, thereby making it an inclusive organisation. This policy should be displayed on the business’ website, or, if they do not have a website, in a conspicuous location within the premises.

Data Protection

The extent to which data protection is an applicable varies largely depending on the nature of the campaign. If it’s an entirely social- or programmatic-based campaign, the entity organising the campaign gets access to only aggregated and anonymised data, which does not demand a high level of compliance. If the campaign directs the user to a website where they need to register, however, it is far more onerous. The website must contain a detailed privacy policy – ideally optimised to be accessible for persons with disabilities – outlining the data that is being collected, the purpose of its collection, who it will be shared with and why, how it will be protected, and how the person may withdraw their consent for the collection, processing and storage of such data. Given the sensitive nature of the data, strong security systems should be implemented.

Community Guidelines

Social media has come to be synonymous with the freedom of speech and expression, which has made it a catalyst for change. In the last few years alone, a number of movements have been waged and amplified over the internet. However, most platforms have strict policies which specify the type of content that is permitted and prohibited on the platform. Most policies unequivocally prevent any type of content that can be viewed as or that promotes bullying and harassment, hate speech, or discrimination against protected classes, which includes persons with disabilities. Content that can be considered triggering is also generally discouraged. We recommend going through the relevant platform’s community guidelines and tailoring the content to ensure that it does not violate or promote violations, since that may diminish the reach of the post.

Targeting Content

While targeting a campaign specifically at relevant stakeholders is one of the biggest USPs of digital campaigns, there are certain restrictions in place that would hamper a campaign with persons with disabilities as their target group.

Google’s (and YouTube’s) policy states that “Advertisers can’t use personal hardship categories to target ads to users or to promote advertisers’ products or services” and clarifies that this includes disabilities, even when content is oriented toward the user’s primary caretaker.

 Similarly, Facebook’s policy states that “Ads must not contain content that asserts or implies personal attributes. This includes direct or indirect assertions or implications about a person’s race, ethnic origin, religion, beliefs, age, sexual orientation or practices, gender identity, disability, medical condition (including physical or mental health), financial status, voting status, membership in a trade union, criminal record, or name.”

Unintended Consequences of the Comment Section 

The comment section for posts about social justice issues like disability are often filled with an overwhelming amount of compassion, with complete strangers bonding over their struggles and experiences. While fostering a strong sense of community is aspirational, it is not without risk. The most obvious is the strong likelihood of hate speech erupting: which is not only undesirable on a humane level, but also a violation of platform policies and the law. Secondly, it results in the somewhat inadvertent collection and sharing of highly sensitive personal data, that can be misused by absolutely anyone to discriminate against persons with disabilities. While these issues may not have direct legal ramifications for the campaign organiser or poster specifically, they are highly undesirable. We would recommend seriously considering the pros and cons of keeping the comments section disabled (no pun intended whatsoever).

Testimonials

A great deal of caution must be used while using testimonials from persons with disabilities, their family, friends or caretakers, or medical and allied healthcare professions. Waivers should be obtained, in writing, prior to using such content. Personal information of persons with disabilities should not be disclosed unless explicitly consented to, and even then, should be avoided. While collaborating with medical or allied healthcare professionals, ensure that the content is not positioned as medical advice, a diagnosis or a tool for self-diagnosis. Encourage viewers to seek professional help if required. Most importantly, ensure that persons with disabilities are not shown in a bad light.

Conclusion

To conclude, it would be unpragmatic to not use the platforms that we have access to today to spread awareness about the many issues that plague society, and to work towards a better tomorrow. However, exercise caution while doing so to avoid inadvertently violating the law.

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Legality of use of CBD Oil in India, and why NDPS Act does not apply to it

CBD Oil Legality India

Recreational use of Cannabis (Ganja) and its resin (Charas or Hashish) was outlawed in India in 1985 by the Narcotic Drugs and Psychotropic Substances Act, 1985 (“NDPS Act”). The NDPS Act itself was the result of India’s commitment under the Single Convention on Narcotic Drugs, 1961 (“Single Convention”). Interestingly, neither the NDPS Act nor the Single Convention outlawed the medical use of cannabis. Nevertheless, medical use of cannabis is almost non-existent in India.

The ground reality is that most State Governments in India are reluctant to issue a license to cultivate and grow cannabis, even though the NDPS Act empowers them to do so. Therefore, almost all cannabis that manufacturers of cannabis-based medicines have access to grows in the wild. Because the cannabis plant grows in the wild with little to no human intervention, there is very little scope for quality control and standardization of the cannabis, which is essential to manufacture a cannabis-based medicine. This poses a big challenge for manufacturers and discourages them from manufacturing cannabis-based medicines at a meaningful scale.

The NDPS Act, however, does not apply to the leaves and seeds of cannabis plant when they are separated from the flowering or fruiting tops of the plant, which are its most intoxicating parts. This is why Bhang (cannabis plant leaf) is sold freely in most States in India, subject of course to Excise Control, since it is still an intoxicant.

As the leaves of cannabis plant are relatively easy to access, there is massive potential for its use in medicine. One of the key chemicals (or cannabinoids) present in cannabis, including in its leaves, is CBD or Cannabidiol. CBD possesses medicinal properties, but not narcotic properties. The World Health Organization (WHO) itself has recommended its exclusion from Single Convention because it “does not have psychoactive properties and has no potential for abuse and no potential to produce dependence”.

Most CBD Oils sold in India (including over internet) are in fact made out of full-spectrum extracts of the leaves of the cannabis plant, meaning they contain all the cannabinoids, including CBD, that are present in the leaves. Since the leaves of cannabis plant are not considered to be a narcotic drug, CBD Oil made out of extract of the leaves should also not be treated as narcotic drug. In other words, consumption of CBD Oil manufactured from leaves of the cannabis plant should not attract provisions of the NDPS Act.   

In fact, CBD Oil manufactured under a license issued under the Drugs and Cosmetics Act, 1940 may be legitimately used by individuals for medical purposes in India.

It is easy to confuse CBD oil with cannabis or hash oil, but the two are vastly different, both in terms of pharmacology and legal treatment: cannabis or hash oil, unlike CBD oil, is 100% narcotic and is subject to strict monitoring and control in India as per provisions of NDPS Act. Its consumption may also attract provisions of NDPS Act and may result in imprisonment.

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Indian Law on advertisement of brand extensions of alcohol and tobacco products and how it poised to become tougher

India’s Ministry of Information & Broadcasting (MIB) recently put out an advisory for private satellite TV channels to ensure that liquor, tobacco and other intoxicants are not advertised directly or indirectly on their channels in violation of existing law, i.e. the Cable Television Network Rules, 1995 (CTNR). Under CTNR, satellite TV channels are prohibited from carrying out an advertisement that directly or indirectly promotes sale or consumption of liquor, wine, cigarettes and tobacco products.

However, advertisement of brand extensions of liquor and tobacco products is permitted under CTNR, provided the product sold under the brand extension does not make direct or indirect references to the prohibited product, it is distributed in reasonable quantity and is available in a substantial number of outlets, and the proposed expenditure on the advertisement of the brand extension product is not disproportionate to the actual sales turn-over of that product.

The enforcement of the provisions of CTNR has been indirectly delegated to a self-regulated industry body called Advertisement Standards Council of India (ASCI) by way of an amendment to CTNR that prohibits TV channels from running any advertisement that violates ASCI’s Code of Self-Regulation in Advertising (ASCI Code). The ASCI Code has a section titled “Guidelines for Qualification of Brand Extension Product or Service”, which as the name suggests, sets out the standards for what would pass as a brand extension and what would not.

As per the ASCI Code, for an advertisement to qualify as a genuine brand extension advertisement (i.e., by implication, not a surrogate advertisement), the in-store availability of the product sold under the brand extension must be at least 10% of the leading brand in the product category OR sales turn-over of the product must exceed INR 5 Crore (50 million) annually or INR 1 Crore (10 million) in the state where the product is distributed. This is a fairly high threshold by Indian standards and many leading brands, including those that put out Music CDs, have been unable to achieve them.

Consequently, some advertisers of liquor and tobacco products have turned to the internet as a media to advertise brand extensions. This is primarily because the CTNR does not apply to advertisements over the internet, there are no clear guidelines for content regulation over the internet, and until very recently, ASCI did not actively track advertisements over the internet.

This is set to change soon. Under the newly notified Consumer Protection Act, 2019 (CPA), the Central Consumer Protection Authority (CCPA) has the power to investigate manufacturers and services providers for misleading advertisement and impose a penalty up to INR 10 lakh (1 million) for the first violation and up to 50 lakh (5 million) for a subsequent violation. The scope of advertisement coved by CPA extends to advertisements over the internet, including in the electronic media, and therefore would cover misleading advertisements made over the internet or electronic media. The CCPA has recently published a draft of Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020 (Draft Guidelines) to discuss what it would consider to be a misleading advertisement. Surrogate advertisements are deemed to be misleading advertisement under the Draft Guidelines, and therefore will be prohibited once the Draft Guidelines are finalized.

The Draft Guidelines do make an exception for brand extension. An advertisement of brand extension will be permitted only if “the advertisement is produced and distributed in reasonable quantities, having regard to the scale of the advertising in question, the media used, and the markets targeted”. In absence of any specification on what would constitute “reasonable quantity”, it is quite likely that CCPA may refer to the ASCI Code to determine what is “reasonable” for the industry, after all, ASCI is a self-regulatory body of the industry. In the event that happens, the high current thresholds for ‘genuineness’ of brand extension advertisement under ASCI Code will be extended for determination of “misleading advertisement” under Consumer Protection Act, 2019, and that may make advertisement of brand extensions more difficult in India than it already is.

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Draft risk classification of all yet-to-be regulated medical devices and IVDs in India published, comments invited until Oct. 2

In February of this year, India’s Health Ministry had notified a new definition of medical devices with an intent to bring all medical devices under the purview of Medical Devices Rules, 2017 (MDR). Prior to such notification, only 37 categories of medical devices that it had notified were regulated by MDR. The new definition took effect from April 1, 2020, which means that MDR started applying to all medical devices from April 1, 2020. However, an exemption from applicability of MDR was added until August 11, 2022 for Class A (low risk) and Class B (low-medium risk) medical devices, and until August 11, 2023 for Class C (medium-high risk) and Class D (high risk) medical devices, in order give time to industry to acclimatize itself to the new regulatory framework of MDR and to obtain appropriate medical device quality certification such as ISO 13485 from designated certifying bodies.

After the development in February, since MDR regulates medical devices on the basis of their risk classification, there was always a question as to how will these yet-to-be regulated or (more appropriately) newly regulated medical devices will be classified. Unlike most countries, risk classification of medical devices is determined in India by the regulator, Drugs Controller General of India (DCGI), itself as per parameters of risk classification stipulated in First Schedule of MDR, and there is no room for dialogue or consultation with the regulator once the risk classification has been concluded.

The DCGI has now done its preliminary assessment and published a draft of medical device risk classification covering all medical devices for public comments. Medical devices have been split into 24 categories (Anethesiology, Pain Management, Cardiovascular, Dental, ENT, Gastroenterlogical, Urological, General Hospital, Operation Theatre, Respiratory, Neurological, Personnel Use, Obstetrical and Gynecological, Ophthalmic, Rehabilitation, Physical support, Interventional and Radiology, Rheumatology, Dermatology, Plastic Surgery, Pediatric and Neonatology Medical, Oncology, Radiotherapy, Nephrology and Renal care and Software). IVD devices have been split into 3 categories (IVD Analyzer, IVD Instrument and IVD Software).

There are some surprises in the risk classification. Sanitary pads, menstrual cups and tampons are sought to be regulated as medical devices. Fertility and conception software are sought to be regulated as medical devices. Birthing bath and new-born infant bed are also sought to be regulated as medical devices.

It is extremely important that the impacted companies review the draft risk classification and provide comments to DCGI before October 2, 2020 regarding either the inapplicability of law i.e. MDR to their products, or the inappropriateness of risk classification assigned by DCGI. Once the risk classification is finalized, it may not be revised for some time. Also, once MDR starts applying to a medical device, other laws such as Drugs (Prices Control) Order, 2013 will also start applying to such medical device.

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Dedicated portal for online filing of consumer grievances under new consumer protection law in India now live

The Consumer Protection Act, 2019 (CPA) was enforced on July 20, 2020 and it replaced the decades old The Consumer Protection Act, 1986. One of the key features of the CPA is the option with consumers to file a complaint electronically. The portal where consumers can file their complaint electronically is now live at the following URL: https://edaakhil.nic.in/ and will be formally inaugurated on September 18, 2020.

It has step-by-step instructional manuals for consumers on how to register, file a consumer complaint, file written response (as opposite party), file a rejoinder to a complaint, file first appeal and so on. There is no need for consumers to file brief of written arguments if consumers are representing themselves. The said portal will initially accept filing for matters before the State Commissions and the National Commission and not for matters before District Commission, meaning that it will only accept complaints where the consideration for good or services paid exceeds one crore (Rupees 10 million), or where an appeal has been preferred against an order of District Commission.

Needless to mention, the portal will accept filing from advocates who represent consumers before a consumer commission as well.

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Legality of making COVID-19 defence or immunity claims in India

India’s central drug regulator, the Drugs Controller General of India, has reportedly served a notice on a major FMCG company in India to explain why action should not be taken against it for making a misleading claim that its hand sanitizer is a “immunity booster” and that it “kills inactive coronavirus”. This points to an increasing trend amongst FMCG Companies who are making COVID-19 or corona virus related claims to capture the hygiene market. The basis for these claims are various World Health Organization (WHO) and scientific reports that have found that ethyl alcohol or isopropyl alcohol is effective in killing the viruses of corona virus family (including SARS-CoV-2) when used over a certain concentration. However, these tests are done in strict laboratory condition and the viruses are exposed to the active ingredients over a period of time to yield result, which does not typically happen in everyday usage of the product. More importantly, it may not be proper to “logically” extend the findings of external scientific reports to any formulation that carries the same active ingredient as the laboratory drug, for the simple reason that in the event of an inquiry, it will be almost impossible for a company to actually test its product for “immunity” or “killing” properties against corona viruses as these viruses are not available in private labs for testing and are generally considered as health and environmental hazards. Therefore, a very clear assessment of risks versus benefit must be done before making a COVID-19 or corona virus related claim for a formulation. In fact, India’s regulator for alternative systems of medicine (Ministry of AYUSH) has expressly prohibited advertisement for COVID-19 treatment by alternative system of medicines (such as Ayurveda and Homeopathy). And, as such, even for making claims such as “kills upto 99.99% germs”, a company must first check whether its formulation is able to satisfy the claim by testing its formulation in a recognized laboratory as per prescribed international standards

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New Consumer Protection law in India: A Simple Overview (Seller Beware!)

Consumer Protection Act 2019

On July 20th, 2020, the new Consumer Protection Act, 2019 came into force in India, replacing the previous enactment of 1986. The new Act overhauls the administration and settlement of consumer disputes in India. It provides for strict penalties, including jail terms for adulteration and for misleading advertisements. More importantly, it now prescribes rules for the sale of goods through e-commerce. The consumer is now truly the king!

Here are some of the highlights:

  • An aggrieved consumer can file complaints about a defect in goods or deficiency in services from where she lives, instead of the place of business or residence of the seller or service provider. The new law provides for e-filing of consumer complaint as well.
  • No fees are required to be paid if the claim is within Rupees 5 lakhs (approximately 3500 USD).
  • A consumer can conduct her own case via video conferencing. Engaging a lawyer is optional.
  • A concept of product liability has been introduced by the new law, thereby allowing aggrieved consumers to claim significant compensation as a relief due to the negligence of the manufacturer or service provider.
  • A group of aggrieved consumers can join hands and file a class action suit (like in the US) to reduce costs and improve chances of redressal or settlement.
  • Producers of spurious goods may be punished with imprisonment.
  • Misleading advertisements may be punished with imprisonment. Celebrities endorsing a product may not be punished but can be barred from endorsing if the advertisement is misleading.
  • E-commerce is now tightly regulated, and e-commerce companies are now expected to disclose all relevant product information, including country of origin, and respond to the grievance of consumers withing prescribed timelines.
  • Settlement of consumer disputes through mediation i.e. with the help of a neutral intermediary outside the consumer court is encouraged under the new law, thus saving time and resources of disputing parties which would otherwise have been spent on dispute resolution through a formal mechanism.
  • Consumers now have several protected rights, including the right to safety, information, choice, redressal as well as right to be heard, to be educated as a consumer, and to a mediated settlement.

Corporates entities that cater to consumers will have to exercise greater care and caution in terms of quality, quantity, and product safety. The boards of corporates that manufacture or trade consumer goods must create a Consumer Affairs Committee to periodically review consumer complaints and address the need to proactively offer mediated settlements by holding online mediation and save themselves the expenses of defending a matter in Consumer Courts, in some remote part of India besides incurring the collateral damage to reputation.

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Alcohol-Based Hand Rubs and Sanitizers – Regulatory requirements, uncertainties and important considerations for doing businesses in India

Alcohol Based Hand Rubs India Legal Requirements Issues

Summary: Due to the sudden spurt of demand for hygiene products due to COVID-19 virus pandemic,   several manufacturers and marketers in India are now selling hand sanitizers containing ethanol or isopropyl alcohol as an active ingredient.  However, regulatory uncertainties, especially surrounding requirement of drug license for stock and sale and scope of price control are becoming roadblocks for businesses from scaling-up operations. Manufacturers and marketers of hand sanitizers are thus forced to explore alternate options such as manufacturing hand sanitizers as a cosmetic or ayurvedic formulation (Indian medicine) to overcome some of these regulatory challenges. However, these alternatives have their own limitation.

Background

The World Health Organization (WHO) has said that hand hygiene is extremely important to prevent the spread of COVID-19 virus. As part of hand hygiene guidelines, WHO  has recommended the use of an alcohol-based hand rub for 20-30 seconds using appropriate technique when hands are not visibly dirty. In line with these guidelines, various governments around the world have promoted the use of ethyl alcohol or isopropyl alcohol-based hand rubs for hand hygiene. India is no exception.

The WHO endorsement and government recommendations for alcohol-based hand sanitizers have resulted in high public demand for these products in India. Due to the heightened public demand, there is a race to manufacture and market alcohol-based hand sanitizers (gel) and hand rubs (liquid) (together referred to as “ABHRs”). The Drug Licensing Authorities have also started granting a license to manufacture ABHRs in a record time of three (3) days to drug manufacturers, even to alcohol distilleries and cosmetic manufacturers to ensure steady and sufficient supply of hand sanitizers and hand rubs.

However, manufacturers and marketers of ABHRs are now faced with some legal and regulatory challenges, which they must overcome in order to scale the business of ABHRs. In this article, we have discussed these challenges in detail.

Stock and sale drug license

The Drugs and Cosmetics Act, 1940 (DCA) mandates that every drug stocked or sold in India must be sold under a license unless the drug, or the person stocking or selling the drug, is exempt by law from this requirement.

There is no such exemption for ABHRs. Therefore, the entire supply chain, including retailers of ABHRs, are required to sell them under a stock and sale license under DCA.

However, due to COVID-19 (Corona) virus, it is not possible to meet the current demand for ABHRs through existing distribution and retail channels that have stock and sell license for drugs. Therefore, there is a widespread expectation that ABHRs should be sold through general FMCG distribution and retail channels.

The only way to legally do so is by positioning ABHRs as disinfectants. There is an exemption under DCA for disinfectants that allows disinfectants to be stocked and sold without a drug license. Such an exemption from stock and sale drug license is not unique to disinfectants. Several other drugs presently enjoy such exemptions as well, for example, oral rehydration salts, medicated dressings, condoms etc.

Some courts in India have, in the past, recognized the disinfectant properties of specific formulations of antiseptic liquids containing alcohol and validated their ability to avail exemption from drug stock and sale license otherwise available only to disinfectants. However, the courts are yet to specifically opine on exemption of ABHRs in general from the requirement of stock and sale license.

The industry is awaiting an official clarification on this issue. The central drug regulator, the Drugs Controller General of India (DCGI), is currently reviewing the regulatory positioning of hand sanitizers, including ABHRs, as ‘disinfectants’ and availability of exemption from drug stock and sale license to them. Until DCGI takes a final position, some State-level Drug Licensing Authorities may accept ABHR’s claim of disinfectants and allow them to be stocked and sold by the distributors and retailers without drug license. But Some State-level Drug Licensing Authorities some may not do the same, and the overall objective to scale ABHRs business to meet demand may not be met.

It is our view that such an exemption should be available to ABHRs, especially since the US Pharmacopeia, which is one of the pharmacopoeias recognized under Indian law for drug quality standards, explicitly acknowledges disinfectant properties of ABHRs.

Meanwhile, with a view to improve access to ABHRs, the Government has notified them as an essential commodity (discussed in next paragraph in detail). However, notification of ABHRs as an essential commodity does not automatically exempt them from the requirement to be sold under a stock and sale drug license either at distributor or retail level. All drugs sold in India are, in fact, essential commodities.

To overcome the limitation imposed by requirement of drug stock and sale license on distribution of ABHRs, some manufacturers and marketers are manufacturing ABHRs under as an ayurvedic drug that is made under an ayurvedic drug manufacturing license, or as cosmetic that is made under a cosmetic manufacturing license. Both ayurvedic drugs and cosmetics do not require any regulatory license for stock and sale and therefore may be distributed via a supply chain that does not have a drug stock and sale license.

However, there are significant challenges in selling ABHRs as ayurvedic drugs or cosmetics. For example, ayurvedic drugs containing alcohol have a long history of litigations with excise department for their potential to be abused as intoxicating liquor. Some State Governments in India have prescribed a limit on alcohol content, stating that alcohol used in the manufacture of antiseptic solutions should not contain alcohol in excess than is necessary for the preservation of (ayurvedic) ingredients. As ABHRs typically have 60%+ alcohol content, manufacturers and marketers of ABHRs must ensure that their product passes the above test.

When ABHRs are sold as cosmetics, it is not possible to make any ‘drug’ claim on it. For example, it is not possible to claim on the label that the ABHR ‘kills’ germs, as it would mean that the product is not for cosmetic application but for medicinal application. The definition of ‘drug’ under DCA is broad and covers all substances that are intended to be used in the prevention of disease in human beings. If any such ‘drug’ claim is made on the label of a cosmetic, then it may invite strict regulatory action under DCA.

Status as new drugs in India

The two ABHR formulations recommended by WHO are: Ethanol 80% (v/v) or Isopropyl alcohol 75% (v/v), Glycerol 1.45% (v/v) and Hydrogen peroxide 0.125% (v/v). As per the records released by central drug regulator, DCGI, both these formulations were first approved for sale in India in 2017. These formulations now preferred by most manufacturers and marketers due to the WHO endorsement and constitute the bulk of new ABHRs being launched in India.

Under New Drugs and Clinical Trial Rules, 2019 (NDCTR), a formulation is deemed to be a “new drug” for four years from the date of its first approval. Therefore, both WHO recommended formulations are to be currently treated as ‘new drugs’ for regulatory purposes in India until 2021.

When any drug is classified as a ‘new drug’, it has two consequences for the manufacturer of the drug. Firstly, a prior permission from the central drug regulator, DCGI, is required to be obtained in addition to a manufacturing license. Secondly, after the manufacturing license is granted, the manufacturer is supposed to undertake post marketing surveillance and submit periodic safety update reports (PSURs) to DCGI.

The manufacturers of ABHRs as per WHO recommended formula must ensure that DCGI permission is in place for their products, in addition to the manufacturing license, and must make periodic submissions of PSURs to DCGI as per the format specified under NDCTR.

Price control of hand sanitizers

ABHRs manufactured under a drug manufacturing license have always been under some or the other form of price control. The Drug (Prices Control) Order, 2013 (“DPCO”) regulates the prices and distribution of ABHRs containing ethyl alcohol 70% (v/v) since 2013. The current price ceiling on 70% ethyl alcohol solution is 0.56 Rupees per ml, which translates into 112 Rupees for 200 ml. All other ABHRs are restricted from increasing their maximum retail price by more than 10% in between twelve months.

However, as described earlier, it is possible to manufacture “hand sanitizers” as an Indian medicine (ayurvedic drug) or cosmetic as well. Ayurvedic formulations are not regulated for price by DPCO to a great extent and cosmetics are not regulated for price at all. Thus, the price cap of 112 Rupees for 200 ml will not apply to ayurvedic or cosmetic hand sanitizers. Furthermore, DPCO does not regulate cost of raw materials of drugs, in this case methylated industrial alcohol / denatured ethyl alcohol / isopropyl alcohol. The DPCO also does not empower State Governments to direct manufacturers of drugs to enhance production capacity and increase their availability. This power is vested only with the Central Government.

In order to overcome these challenges, the Indian Government has notified The Essential Commodities Order, 2020, thereby classifying “hand sanitizers” as essential commodity until June 30th, 2020. Due to this, all hand sanitizers (drug, ayuvedic medicine, cosmetic) and the raw material used in them have come under the purview of price control and have become amenable to jurisdiction of respective State Governments. The Indian Government has also notified The Fixation of Prices of Masks (2 ply and 3 ply), Melt Brown Non-Woven Fabric and Hand Sanitizers Order, 2020 (“Hand Sanitizer Price Control Order”). As a consequence, all hand sanitizers (drug, ayurvedic, cosmetic) cannot be sold for price higher than 100 Rupees for 200 ml until June 30, 2020. Needless to say, after expiry of the aforesaid order, hand sanitizers will be regulated as per DPCO (to the extent applicable to them).

There has been a collateral impact of the Hand Sanitizer Price Control Order on non-alcohol based hand sanitizers. There are currently at least twenty-four (24) formulations of hand sanitizers approved for sale in India, some of which are not alcohol-based. The Hand Sanitizer Price Control Order does not clarify whether it applies only to alcohol-based hand sanitizers or other hand sanitizers as well. The expression “hand sanitizer” is not defined under law, and has been interpreted loosely by the central drugs regulator, DCGI. The DCGI has in fact put out a list of all hand sanitizers approved by it which includes both alcohol-based and non-alcohol based hand sanitizers. Therefore, there is a risk that the Hand Sanitizer Price Control Order may be interpreted broadly and cover non-alcohol based hand sanitizers as well.

On a separate note, manufacturers who have been selling formulation of ethyl alcohol 70% (v/v) will have to obtain a prior price approval from central price regulator, National Pharmaceutical Pricing Authority (NPPA), before manufacturing ABHR containing ethyl alcohol as per the procedure prescribed under DPCO.

Making Corona related Claim

There is scientific laboratory data now in place to support the claim that WHO recommended formulae for ABHRs, or ethyl alcohol or isopropyl alcohol in concentration of more than 30% v/v, can inactivate COVID-19 virus in thirty (30) seconds.

However, such scientific laboratory data has not been endorsed by India’s central drug regulator, DCGI, and is very specific to WHO formulations when used under laboratory conditions. If any manufacturer or marketer wishes to put a generic COVID-19 virus related claim on its label, it may need to first obtain prior permission from DCGI who may decide to treat the ABHR as a untested ‘new drug’ and require the manufacturer to submit supporting laboratory data for its own formulation before it is permitted to make any COVID-19 virus related claim.

Needless to say, in absence of the permission from DCGI, any such claim may make the manufacturer liable for prosecution under DCA.

Making “WHO recommended formula” claim

There is an expectation in some quarters of the industry that the if an ABHR is manufactured as per the WHO recommended formulae (described in earlier paragraphs), then it should be launched with a supporting claim of ‘WHO recommended formula’ on its label. However, it may not be ethical to commercially exploit the WHO brand name since the WHO formulae were originally recommended as an alternative when suitable commercial products were either unavailable or too costly. The actual recommendation from WHO for ABHRs is, in fact, for any effective alcohol-based hand rub product that contains between 60% and 80% of alcohol.

For context, the WHO recommended formula even today is intended for local production by pharmacies and WHO has permitted use of its brand name by them in order to (most likely) lend credibility to the end product.

On the same note, it is an offence in India to put the name of World Health Organization or its abbreviation (WHO) without prior permission of the Central Government under the Emblems and Names (Prevention of Improper Use) Act, 1950. Therefore, even if a manufacturer is able to manufacture the exact formulation as recommended by WHO, it should not claim that it is manufactured “as per WHO recommended formula” without prior permission of the Central Government.

Putting Government Logo for endorsement in fight against Covid-19 virus

Like World Health Organization, putting the name or official seal or emblem of the Government of India or of any State or of a Department of any Government without prior permission of the Central Government is an offence under the Emblems and Names (Prevention of Improper Use) Act, 1950.

Getting the labelling right

Apart from alcohol, there may be other active ingredients in ABHRs such as hydrogen peroxide which kill or limit the growth of harmful microorganisms. Such ABHRs with more than one active ingredients fall in the category of ‘fixed dose combinations’ (“FDCs”). Every FDC is required by law to state the composition on the label first, followed by its brand name. For instance, in case of the WHO recommended formulae described earlier, the name of the active ingredients must appear prominently on the label and simply writing “hand sanitizer” or “hand rub“ may not be enough.

Further, due to the high alcohol content in the ABHRs, there are specific declarations that ought to appear on their label. Each label must specify that ABHR contains denatured alcohol (in case of use of methylated spirit) and that it is for external use only. If the ABHR is making a disinfectant claim, then it must specify the mode of use. The content of the alcohol in the ABHR must be stated in terms of average percentage of absolute alcohol.

It is also advisable to write about storage conditions and appropriate warnings, in view of the high concentration of alcohol in ABHRs.

Same brand name, different drug

Some marketers of ABHRs are selling two or more formulations of ABHRs under the common / umbrella branding of ‘Hand Sanitizer’. This strategy should be revisited, since different formulations of ABHRs are different drugs, and selling different drugs under a common / umbrella branding of ‘Hand Sanitizer’ may be misleading.

If a marketer is selling ABHRs manufactured under pharmaceutical drug license and ayurvedic drug license under a common / umbrella branding such as ‘Hand Sanitizer’, then the regulatory risk identified above may increase since pharmaceutical drug and ayurvedic drug are two very different products though with the same end-application.

The law does not want consumers to be misled while buying drugs. Therefore, every manufacturer who wishes to sell ABHR under a brand name is required to file a declaration at the time of applying for drug manufacturing license. The declaration states that the brand name under which the drug is proposed to be sold is not used by  any other manufacturer. This declaration should be submitted by manufacturers of ABHRs before obtaining the manufacturing license for ABHR.

Getting quality aspects right

The manufacturers of ABHRs is obligated by law to ensure that its products are of standard quality. The WHO has recommended that the efficacy of any ABHR should be proven according to European (EN 1500) or American (ASTM E-1174) standards. Considering these are foreign standards and may not be enforceable in India, manufacturers of ABHRs must ensure that the hand sanitizers at least satisfy requirements of quality and efficacy as per applicable Indian standards.

As of date, in case a drug is found to be not of standard quality (NSQ), the liability lies with the manufacturer and not the marketer. However, this will change in future. From March 1, 2021, the marketers of drugs themselves will be responsible for the quality of the drug and the agreement between marketers and manufacturers will play an important role in the determination of liability. Therefore, the meeting of applicable Indian quality standards by ABHRs will be important for both the marketer and the manufacturer.

Conclusion

Hand Sanitizers, specifically ABHRs, are more relevant and in-demand in India than ever before. However, manufacturers and marketers of ABHRs should be careful about compliance with laws and regulations, because any oversight today may invite strict regulatory action in future.

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India’s new price regulation for medical devices and equipment – impact on price and supply chain due to Drugs (Prices Control) Order, 2013

Summary

On February 11, 2020, the Indian Government had gazetted a notification that brought all medical devices and medical equipment sold in India under existing quality and safety regulatory framework by declaring them as “drugs”.  However, this notification has exposed all medical devices to India’s drug price control regulation that was put in place to make drugs affordable and accessible as well. So, from April 1, 2020 (i.e. the effective date of the notification), all manufacturers and importers of medical devices and medical equipment sold in India will have to be careful to not increase the maximum retail price of their products by more than 10% within 12 months. They will have to make periodic trade-related filings with the Government in which they will have to submit price information such as price to distributors, price to stockist, price to hospital and price to retailer. And, on top of all this, they will have to operate under constant risk of price fixation at the hands of the Government, like was done in the case of coronary stents and knee implant systems in 2017.  

Background

The quality and safety of drugs sold in India is regulated by the Drugs and Cosmetics Act, 1940 (“DCA”). There is no equivalent legislation for medical devices. Therefore, the Indian Government notifies those medical devices whose quality and safety it intends to regulate as ‘drugs’ from time to time.

Prior to February 11, 2020, the Indian Government used to regulate the quality and safety of medical devices in a piecemeal  manner. There were only 37 categories of medical devices and  medical equipments that had been notified as drugs under DCA (see annexure for this list). However, on February 11, 2020, the Government declared all medical device and medical equipment to be drugs in order to bring them under the fold of quality and safety regulation under DCA, effective April 1, 2020. We have written extensively about it here.

There was a collateral impact of this decision of the Government on price and supply chain of medical devices and medical equipment. India regulates production, control and supply of all essential commodities through a law called the Essential Commodities Act, 1955 (“ECA”). ‘Drugs’ are regulated as an essential commodity under ECA. Therefore, the Government has power to regulate product control and supply of all drugs under ECA. In furtherance of the provision of ECA, the Government has notified a price control order for drugs called the Drugs (Prices Control) Order, 2013 (“DPCO”).

On February 11, 2020, when the Government decided to regulate all medical devices and medical equipment by notifying them as drugs, it automatically subjected them to the provision of DPCO. The authority responsible for the administration of DPCO, the National Pharmaceutical Pricing Authority (NPPA), has already brought out a clarificatory order stating that the provision of DPCO will squarely apply to all medical devices and medical equipment.

Impact on price and supply of medical devices after April 1, 2020

From April 1, 2020, all medical devices and medical equipment manufacturers and importers will have to comply with the provisions of DPCO. The obligations imposed by DPCO on all manufactures and importers of medical devices and medical equipment are as follows:

Retail sale price to be mentioned on all medical devices, including ones for institutional use: The DPCO requires that every SKU of medical device and medical equipment must be labelled with its maximum retail price (“MRP”) that is to be set by the importer/manufacturer/marketer. The said price must be prefixed by the words “Maximum Retail Price” and suffixed by the words “inclusive of all taxes”.

Before April 1, 2020, there was an exemption available for medical devices and medical equipment that weighed more than 25 kg or that were intended for institutional use,  from declaration of MRP under the Legal Metrology (Packaged Commodity) Rules, 2011. However, from April 1, 2020, all medical devices and medical equipment, irrespective of their weight and intended use, will have to declare MRP on the label of each SKU in the manner specified above.

% cap on variation of retail sale price: The importers, manufactures and marketers of medical devices will have to be cognizant about variation of the MRP declared on the label of their medical devices. The MRP of the product should not be varied by more than 10% in any 12 month period, else the variation in excess of 10% will be recovered as ‘overcharging’ from the business concerned. For example, if an importer of medical device decides to reduce the MRP by 20%, but after a single quarter decides to return to the original retail price (i.e. increase by around 20%), then it won’t be permitted to do so. It can, at best, increase its MRP by 10% of the reduced price. If it starts selling the product at the original MRP, then the 10% excess will be recovered from the importer on MRP basis i.e. by multiplying the number of units sold with the 10% excess, along with intrest and penalty.

Price related filings to be done from time to time: All importers, manufacturers and marketers of medical devices and medical equipment will have to submit price to distributors/stockists, price to retailers/hospitals and retails sale price in format prescribed under Form V of Schedule II of DPCO (with appropriate modifications) in the event of revision of MRP. The aforesaid information is to be submitted on an online platform called Integrated Pharmaceutical DataBase Management System operated by NPPA.

Risk of price fixation: The NPPA has the powers to fix ceiling prices of any drug under extra-ordinary circumstances and in public interest. Now, from April 1, 2020, this power will extend to all medical devices and medical equipment. Once a price is fixed, the importer, manufacturer and marketer of said medical device has to set its MRP either equal to or below the ceiling price. Most of the times, NPPA also fixes the margins that may be offered to the supply chain and makes the concerned importer/manufacturer/marketer liable for any breach of margin by the supply chain.

In the past, the NPPA has used this power to fix prices of coronary stents and knee implant systems (both devices were notified as drugs in 2005). In the aftermath of the price fixation, many advanced coronary stents were sought to be withdrawn from India by the manufacturers on the grounds of unviability. A prior permission from NPPA is required to withdraw or to reduce production / import of medical device whose prices have been fixed by NPPA in public interest.

Risk of being subject to market based pricing: The Ministry of Health and Family welfare brings about a National List of Essential Medicines (“NLEM”) every few years. Medical devices are also included in the said list from time (e.g. coronary stent). The consequence of being included in NLEM from pricing perspective is that the medical device in question automatically becomes subject to a market price based price control i.e. the MRP of the said device must not exceed the average MRP of all importers, manufacturers and marketers who sell the same device and who have more than 1% market share in that particular device market. The said average MRP (referred to as “Ceiling Price”) is decided and set by NPPA. The Ceiling Price may go up or down every year, depending on the wholesale price index of the Government. The MRP of the medical device will have to be adjusted accordingly.  A prior permission from NPPA is required to withdraw or to reduce production / import of medical device which are recognized as ‘essential’ by the Government.

Consequences of non-compliance

There are different consequences associated with different violations. Any violation of DPCO is serious because its parent legislation, the Essential Commodities Act, 1955, stipulates that any breach of DPCO may result in imprisonment and fine for the company and person(s) in-charge of the company for conduct of its business. However, undoubtedly, the most draconian provision of DPCO is the liability to deposit any amount ‘overcharged’ by the importer or manufacturer in breach of DPCO in addition to the interest and penalty.

Final comments

It is extremely important for medical devices and medical equipment companies doing business in India to be aware of the compliance requirements and obligation under India’s price control law (i.e. EC Act and DPCO). Since all medical devices and medical equipment are now regulated as drugs, and all drugs are treated as essential commodities, an inadvertent violation of India’s price control laws may have serious consequences for the business of these companies.